How Central Banks Use Reserve Requirements as a Policy Tool

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Jun 1, 2026 · 8m · transcript

In Episode 25 of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the central bank tool that doesn't get enough airtime: reserve requirements. They start with a concrete anchor — China's central bank just cut its reserve requirement ratio by 25 basis points in May 2026 — and explore why reserve requirements have fallen out of favor in advanced economies while remaining active in emerging markets. The hosts break down the mechanics: how changing the percentage of deposits banks must hold can expand or contract the money supply, the trade-off between control and market…